Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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Annotation 280.0930

280.0930 Samples. A taxpayer purchased sample jewelry in Asia and had fabrication work performed on the samples in Florida. The jewelry was then brought into California. The jewelry was shipped to dealers both inside and outside California as samples for display purposes. The packages in which the jewelry was shipped contained a packing slip noting a price for the samples. Some dealers remitted the price shown. Other retailers did not. The taxpayer regarded the furnishing of the samples as consignments and made no attempt to repossess them.

With respect to payments received from the dealers, the taxpayer is the retailer of the display samples. Tax applies to the sales to California dealers. The storage in California prior to shipment is not taxable.

With respect to transfer of samples to California dealers without payment, the taxpayer is regarded as having made a taxable use of them in California. Use tax applies to the taxpayer's cost.

Inasmuch as the samples shipped out of the state remained the property of the taxpayer, no tax applies because the use in California was excluded from the definition of "use" under section 6009.1 and all other use occurred outside California. 3/14/94.